Credit Suisse maintains outperform rating on Perseus after A$102m equity raise

JOHANNESBURG (miningweekly.com) – Financial services group Credit Suisse has maintained its outperform rating and A$0.72 a share price target on West African gold producer Perseus Mining following the company’s A$102-million equity raise.

The A$102-million raise at $0.50 a share, which comprised a $A61-million institutional placement and a A$41-million nonrenounceable entitlement offer, would be used to fast-track Perseus’s growth strategy including construction of its Sissingué project and definitive feasibility study (DFS) at its Yaouré project, both in Cote d'Ivoire. 

Perseus was currently trading at A$0.565 a share and would come out of trading halt on Thursday.

The company has also mandated Macquarie Bank and BNP Paribas to provide a $60-million debt facility to be applied to the development of Sissingué.

Credit Suisse analyst Michael Slifirski said this left Perseus’ operating Edikan gold mine, in Ghana, Sissingué and Yaouré “comfortably funded” and underpinned a multi-mine strategy for the company.

Slifirski highlighted that while Edikan would remain cash-neutral in the 2017 financial year, strong cash generation from the 2018 financial year was expected.

“Sissingué’s development is no, or soon will be, fully funded, independent of Edikan. If it is delivered on budget and performs to plan, it should rapidly repay its debt and generate a satisfactory return, contributing to the future funding of Yaouré,” said Slifirski.

Perseus MD and CEO Jeff Quartermaine said the equity raising allowed Perseus greater balance sheet strength and flexibility.

“The successful completion of the equity raising and finalising debt financing for Sissingué will provide Perseus with the ability to implement our growth strategy.

“Perseus has the opportunity to transform from a company with a single producing gold mine in Ghana into a diversified West Africa-focused miner with two producing operations, a very high quality development project in Yaouré gold project and further exploration potential.

“The equity raising will also provide us with the balance sheet flexibility to accelerate exploration and completion of the DFS at the Yaouré gold project. Following completion of construction at Sissingué, we expect to be in a position to fund further growth initiatives through a combination of internal cash flows and/or future debt.”

Perseus’s Sissingué project was expected to start production in December 2017, while the Yaouré DFS was targeted for mid-2017.